A baby is born today, AFPS 15.
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Webb has done a broad brush piece for the FT. This link should defeat the paywall. He now earns a shekel from Royal London (a very good pension company) which (given its saver demographic) would stand to benefit from a flat rate rebalancing to 30%.
George Osborne should scrap the pensions lifetime allowance - FT.com
George Osborne should scrap the pensions lifetime allowance - FT.com
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If true, Katie Morley has pulled a rabbit out of the hat with this one. In essence, AFPS was contracted out, ie, you gave up additional state pension benefits in return for a better occupational one.
That meant that many folk on the cusp of drawing the new, single tier state pension should receive less than someone who wasn't contracted out because they wouldn't have had time under the new state regime to boost NIC contribution levels to what was required. It's why servicemen and women pay so much more in NIC now, than they did last year.
If Morley is right, and it seems she is probably well researched on this to be safe, the state pension component for those about to draw it may well be smaller than even anticipated. On the surface of it, some may get one bigger though. Staggering. Time for the mess Webley for someone I think, especially as it seems they have been quietly sitting on it for some time.
The separation of NIC from HMRC and the fact that DWP and HMRC just don't work together has created, potentially, a holy mess. It will be interesting to see if MoD still keeps records (post 2012, it wasn't required to do so) and whether the data that it does hold on you, in respect of your Guaranteed Minimum Pension, equates to that which the government assumes you have.
Four million people retiring from April could get the wrong state pension - Telegraph
That meant that many folk on the cusp of drawing the new, single tier state pension should receive less than someone who wasn't contracted out because they wouldn't have had time under the new state regime to boost NIC contribution levels to what was required. It's why servicemen and women pay so much more in NIC now, than they did last year.
If Morley is right, and it seems she is probably well researched on this to be safe, the state pension component for those about to draw it may well be smaller than even anticipated. On the surface of it, some may get one bigger though. Staggering. Time for the mess Webley for someone I think, especially as it seems they have been quietly sitting on it for some time.
The separation of NIC from HMRC and the fact that DWP and HMRC just don't work together has created, potentially, a holy mess. It will be interesting to see if MoD still keeps records (post 2012, it wasn't required to do so) and whether the data that it does hold on you, in respect of your Guaranteed Minimum Pension, equates to that which the government assumes you have.
Four million people retiring from April could get the wrong state pension - Telegraph
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Means testing by stealth
Al,
Is this the start of 'Means testing' pensioners by stealth.......?
AFPS pensions are seen by many as gold plated.
If the article is correct, this is an ideal way for the government to abate our overall retirement income, clawing back something from a group of people that it thinks are getting too much.
Hippo
Is this the start of 'Means testing' pensioners by stealth.......?
AFPS pensions are seen by many as gold plated.
If the article is correct, this is an ideal way for the government to abate our overall retirement income, clawing back something from a group of people that it thinks are getting too much.
Hippo
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If he introduces a flat rate of tax, it'll be hellishly complex for defined benefit schemes anyway, but in particular for AFPS which will be fiendishly complex to administer. If he seeks to tax contributions at source, at marginal rate, an employer's pension contribution will have to be taxed at 20, 40 or 45% before a flat rate 25 or 30, or 33% subsidy (tbc, if any change at all) is added.
It will be complicated for everybody, but virtually impossible to administer in the case of public sector defined benefit schemes, and as for AFPS.. I can't even get my head around the notion of taxing a non contribution. In effect, some savers will be ‘fined’ for making pension contributions, before getting the flat rate benefit added. Too early.. coffee!
Either way, it won't be pretty - I'm thinking that if a serviceman of woman gets taxed on that which he contributes, in an instant, their rights will change. No more of the cosy amateurism that has defined how the military pension is implemented - and certainly an end to instances we had, when people were sacked days away from an IP.
He could just decide to get rid of tax free cash or reduce the amount you can take or reduce the annual allowance even further..
It will be complicated for everybody, but virtually impossible to administer in the case of public sector defined benefit schemes, and as for AFPS.. I can't even get my head around the notion of taxing a non contribution. In effect, some savers will be ‘fined’ for making pension contributions, before getting the flat rate benefit added. Too early.. coffee!
Either way, it won't be pretty - I'm thinking that if a serviceman of woman gets taxed on that which he contributes, in an instant, their rights will change. No more of the cosy amateurism that has defined how the military pension is implemented - and certainly an end to instances we had, when people were sacked days away from an IP.
He could just decide to get rid of tax free cash or reduce the amount you can take or reduce the annual allowance even further..
I like to think of myself as fairly intelligent but I must confess to not having a clue about the intricate workings of pensions and the associated tax implications. That said how the hell do the government expect the masses to invest in a pension if they keep tinkering and making it so damn complicated for the average Joe to understand?
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I couldn't agree more. We don't make widgets anymore, so we use wealth instead. It would be nice if Osborne didn't use general contentment and personal happiness as a screwdriver with which to make mid course corrections and short term tweaks to his career ambitions. There's an entire industry (and I'm not oblivious to charges of hamfisted irony) now established to feed the demand, and more importantly, the Exchequer. It has replaced widgets.
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Al,
The concept of taxing us on something which we have no choice over and which some would say has never existed is something that has vexed me for ages.
We do have the choice to stop paying into the pot but, if my pay is abated by x% to account for my pension then surely we should be able to get the abated percentage back if its not paying into our pension?
i suspect we are collateral damage in a wider offensive but it certainly leaves a bitter taste.
The concept of taxing us on something which we have no choice over and which some would say has never existed is something that has vexed me for ages.
We do have the choice to stop paying into the pot but, if my pay is abated by x% to account for my pension then surely we should be able to get the abated percentage back if its not paying into our pension?
i suspect we are collateral damage in a wider offensive but it certainly leaves a bitter taste.
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You can opt out (which would stop the pension growing) but you wouldn't get extra in your pay packet either. The courts have ruled that the scheme is non-contributory, irrespective of the abatement factor.
Non-contributory? But they pay you less to take into account the pension, sounds like a contribution to me! No wonder l have little faith in this government or the justice system.
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Opting out could have considerational merit for lots of people, in principle.
Having a beefy promotion late in the day could create a liability with a skewed annual allowance/defined benefit liability that you might want to place instead, with a personal scheme that offers you more flexibility and unfettered, earlier access.
To see why the country is so stuffed, if you're bored, here's my blog from last year commenting on the UK WOG accounts. The next ones (this year's) will make for interesting reading. Well, I say interesting.
Al Rush | Wanted: Bill Gates and 40 of his just as successful mates
Having a beefy promotion late in the day could create a liability with a skewed annual allowance/defined benefit liability that you might want to place instead, with a personal scheme that offers you more flexibility and unfettered, earlier access.
To see why the country is so stuffed, if you're bored, here's my blog from last year commenting on the UK WOG accounts. The next ones (this year's) will make for interesting reading. Well, I say interesting.
Al Rush | Wanted: Bill Gates and 40 of his just as successful mates
I'm with 4everAD on this - are they making this deliberately difficult just to hide what is going on? To quote Sir Humphrey, Osborne is most definitely conducting himself in a manner which, all things being considered, and making all possible allowances, is, not to put too fine a point on it, perhaps not entirely straightforward. Just what the hell are they doing down there? Even a bear of the meanest intelligence can see that all they are doing is storing up even more problems for the future. This constant buggering around with pensions will simply force people to say:
'sod it, it isn't worth it; with all the changes and tinkering, the only thing I can guarantee is that I'm going to get screwed by something I don't and can't understand. I'm not playing, the State can sort me out in retirement!'
Well, that constant tinkering (or is pandering to the politics of envy to win a few votes, I can't quite tell) might enable Gideon to plug the gap now - only it won't if the recent IFS report is to be believed - but forcing more people to rely on the state in later life by disinsentivizing saving now is a recipe for disaster when the demographics are already skewed towards an aging population. If this is the sort of muddled thinking they churn out at Oxford, I'm glad I decided against it and went to a decent university!
Well that's the rant bit over, but just what can we do to mitigate such stupidity? If we stay in AFPS for the long haul, it's likely to lead to a potentially significant tax bill; if we pull out of AFPS we don't get any compensation of abated salary. I would almost be prepared to do a deal with the MOD: stop paying my pension contribution and instead meet my annual ISA allowance. It would save the MOD a reasonable sum each year (potentially quite a bit taken across the services) and enable me to avoid a tax bill for doing nothing other than my job. Frankly the 'promise' of an index linked pension is becoming more and more notional given constant tax and scheme changes. At least I'd be master of my own destiny this way.
The potential lack of options and the seeming inevitability of yet another shafting is not only frustrating but damaging to morale and operational effectiveness. God knows how much time is being wasted at units up and down the country as rather than doing their jobs, individuals are sitting in crew rooms talking about it or hunched over DINs and calculators trying to work it all out.
'sod it, it isn't worth it; with all the changes and tinkering, the only thing I can guarantee is that I'm going to get screwed by something I don't and can't understand. I'm not playing, the State can sort me out in retirement!'
Well, that constant tinkering (or is pandering to the politics of envy to win a few votes, I can't quite tell) might enable Gideon to plug the gap now - only it won't if the recent IFS report is to be believed - but forcing more people to rely on the state in later life by disinsentivizing saving now is a recipe for disaster when the demographics are already skewed towards an aging population. If this is the sort of muddled thinking they churn out at Oxford, I'm glad I decided against it and went to a decent university!
Well that's the rant bit over, but just what can we do to mitigate such stupidity? If we stay in AFPS for the long haul, it's likely to lead to a potentially significant tax bill; if we pull out of AFPS we don't get any compensation of abated salary. I would almost be prepared to do a deal with the MOD: stop paying my pension contribution and instead meet my annual ISA allowance. It would save the MOD a reasonable sum each year (potentially quite a bit taken across the services) and enable me to avoid a tax bill for doing nothing other than my job. Frankly the 'promise' of an index linked pension is becoming more and more notional given constant tax and scheme changes. At least I'd be master of my own destiny this way.
The potential lack of options and the seeming inevitability of yet another shafting is not only frustrating but damaging to morale and operational effectiveness. God knows how much time is being wasted at units up and down the country as rather than doing their jobs, individuals are sitting in crew rooms talking about it or hunched over DINs and calculators trying to work it all out.
Last edited by Melchett01; 8th Feb 2016 at 22:14.
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The Express now reporting on it.
HMRC data blunders mean millions could get a lower flat-rate pension payout, experts warn | UK | News | Daily Express
Melch, if the Chancellor does reduce annual and/or lifetime allowance it will signal the end of the phony war. We will be seeing, properly, the much vaunted but always brushed under the carpet beginning of the end for (unfunded) public sector pensions. Will mil be a different kettle of fish, could the Exchequer afford or justify a pay hike to reflect the AFPS abatement?
HMRC data blunders mean millions could get a lower flat-rate pension payout, experts warn | UK | News | Daily Express
Melch, if the Chancellor does reduce annual and/or lifetime allowance it will signal the end of the phony war. We will be seeing, properly, the much vaunted but always brushed under the carpet beginning of the end for (unfunded) public sector pensions. Will mil be a different kettle of fish, could the Exchequer afford or justify a pay hike to reflect the AFPS abatement?
Al,
I just don't know what to think anymore on pensions; I just can't trust a word anybody says these days. We hear that the AFPS 15 scheme is good for 25 years and there will no further fundamental change, but then you get fundamental change because of changes to underlying policy and rules.
They probably can't afford to increase salaries to take the abatement into account. Well, they probably can, but I doubt they would, probably citing the need to get debt under control, don't want to set a precedent, public sector all in it together etc. They'd probably even cite the risk to inflationary pressures with a rise, that despite the inflation rate being substantially below the 2% target for how long now? The double-digit pay rise for MPs wouldn't even register on the hypocrisy & moral maneuverability scale. When it comes to pensions I just wonder 'what now?' whenever I hear Osborne et al opening their mouths and wonder why we all bother making the effort. After all, that the much vaunted SDSR focused on equipment budgets and completely neglected the personnel side, just points to how seriously they consider people as the most valuable asset.
I just don't know what to think anymore on pensions; I just can't trust a word anybody says these days. We hear that the AFPS 15 scheme is good for 25 years and there will no further fundamental change, but then you get fundamental change because of changes to underlying policy and rules.
They probably can't afford to increase salaries to take the abatement into account. Well, they probably can, but I doubt they would, probably citing the need to get debt under control, don't want to set a precedent, public sector all in it together etc. They'd probably even cite the risk to inflationary pressures with a rise, that despite the inflation rate being substantially below the 2% target for how long now? The double-digit pay rise for MPs wouldn't even register on the hypocrisy & moral maneuverability scale. When it comes to pensions I just wonder 'what now?' whenever I hear Osborne et al opening their mouths and wonder why we all bother making the effort. After all, that the much vaunted SDSR focused on equipment budgets and completely neglected the personnel side, just points to how seriously they consider people as the most valuable asset.
